Alps South, LLC v. The Ohio Willow Wood Co.

Addressing the issue of standing, the U.S. Court of Appeals for the Federal Circuit vacated a jury verdict of willful infringement, finding that plaintiff did not possess all substantial rights to enforce the patent at the time the complaint was filed. Alps South, LLC v. The Ohio Willow Wood Co., Case Nos. 13-1452; -1488; 14-1147 and -1426 (Fed. Cir., June 5, 2015) (Chen, J.).

After third party Applied Elastomerics (AEI) licensed its patent for liners used to cushion a prosthetic limb to the plaintiff Alps, Alps sued the defendant Ohio Willow Wood (OWW) for patent infringement. Shortly after Alps filed its complaint, OWW filed a motion to dismiss for lack of standing, claiming that Alps did not receive “all substantial rights” from AEI. In response, AEI and Alps executed a nunc pro tunclicense that eliminated several limitations on Alps’ rights and removed certain rights retained by AEI. The district court denied the motion finding that the original license sufficed to provide standing and the nunc pro tunc agreement clearly gave Alps all necessary rights. At trial, the jury held that the patent was valid and that OWW willfully infringed. OWW appealed.

The Federal Circuit reversed, finding that the original license agreement failed to confer onto Alps the necessary rights to sue as a sole plaintiff. The Court was not persuaded by Alps’ claim that it possessed all substantial rights to sue as a sole plaintiff because it had the right to exclude and the right to pursue infringement litigation under its own control and its own cost. According to the Court, the original license prohibited Alps from settling infringement litigation without prior written consent from AEI, provided AEI the right to pursue an infringement action if Alps declined to do so within six months of learning of suspected infringement, and limited Alps’ enforcement to a particular field of use (prosthetic products). The Court found these limitations fatal to Alps’ standing argument, placing particular emphasis on the field of use limitation. According to the Court, a license limited to a particular field of use creates a substantial risk of multiple suits and could result in multiple liabilities.

Alps also argued that, even if it lacked standing under the original license, this defect was cured by the nunc pro tunc license, because that license eliminated both the field of use restriction and the provision that permitted AEI to pursue litigation if Alps declined to do so. However, the Federal Circuit concluded that “nunc pro tunc agreements are not sufficient to confer retroactive standing,” explaining that party asserting patent infringement is “required to have legal title to the patents on the day it filed the complaint and that requirement cannot be met retroactively.”